If you are living or travelling in Southeast Asia, chances are that you are only too familiar with the two leading ride sharing companies in the region: Uber and GrabCar.
But do you know what makes one better than the other?
Uber: The Unicorn from Silicon Valley
Uber started as a black car booking service in the US, but quickly expanded on their Uber X (private drivers) service once they realized they had a winning product. Today, Uber is available in nearly every country in Southeast Asia, but rates and consumer experiences vary widely.
Uber uses their extensive hoard of cash to both recruit drivers and acquire new riders. However, many have questioned whether Uber can survive if they turn off the spigot of cash which is constantly used to create incentives for drivers and users of their service.
The fundamental question then is: Will the company continue to grow and generate larger number of drivers and passengers without constant pumping of cash into the business.
To understand how Uber will fare in SE Asia, you need to know the following:
Stiff competition from traditional taxi services: Unlike the US where most cities do not have a massive fleet of cabs (save for NYC), Asian cities have plenty of taxi options available. In some cities it’s easy to spot the traditional metered taxi while in other cities hailing a ride might require some judgment, negotiation and risk. Either way, taxi services are abundant, making Uber one of the many option, and not the go-to option.
Credit card payments not always an option: Uber requires that people have credit cards which many people in Asia do not yet have. Most transactions are done in cash or through country-specific payments (such as NETS in Singapore). Uber recently announced a change in policy which will allow users to pay in cash. This change is certain to make them more competitive in the region.
Car ownership not as common: Uber requires that drivers own a car, which, in Asian cities, is much less common than in the US. To get around this, Uber helps drivers rent cars, however, this fees significantly eats int the driver’s profits.
Higher driver churn: A significant number of drivers churn because they work have to work significantly harder than what they expected.
Pricing policy not clear: Uber is not that popular around SE Asia yet, so in many places Uber charges can seem to surge for no apparent reason. This creates a frustration among customers who then begin to see Uber as a last resort as opposed to a first option.
No local phone numbers for travelers: Because of extensive travel around Asia by both residents and visitors, riders often do not have a local number. This can be a challenge for those struggling to locate the pick-up area and coordinate the journey.
Unreliable maps create confusion: Maps in Asia are consistently unreliable when compared to the US. This creates a challenge for the rider and driver who are looking to meet up as often the map shows the rider in an incorrect location. The maps can also create confusion about best routes to estimates of distances of drivers.
Savings on local booking charges: In places like Singapore, Uber can save you from paying a taxi booking fee and from extra charges in the CBD and evening fares, though their basic fees are a bit higher than taxis.
Regular promotions push business: In Indonesia there are many promotions that will give you free ride and fares match those of traditional taxi rides.
Safe and reliable taxi services preferred options: In Vietnam, where taxis are super cheap and safe, Uber is less popular than taxi apps.
Grab: Home Grown Hero
Grab is a private driver booking service from the company called Grabtaxi/MyTeksi. Grabtaxi (called Myteksi in Malaysia) is a service that allows someone to hail a cab from an app rather than grabbing one off the street. It works in a similar format to the traditional call-to- book services. You simply click your location, pay a booking fee, and get a registered taxi. However, seeing how profitable private cars were for Uber, Grabtaxi decided to jump into the space with their own service called Grabcar.
Will Grab rewrite history? Here’s what you need to know:
High popularity: Grabtaxi is a very popular app used all around cities in Asia and they are pushing very hard for riders to use their Grabcar service.
Drivers are trusted more: The main appeal of Grabtaxi is that taxi drivers are often much more reliable and knowledgeable about routes than independent drivers, so it’s often worth paying the booking fee if going to a hard-to- find place.
Private car ownership a challenge: Grabcar requires drivers to have access to a private car which is a challenge in many places either because of accessibility or costs that cut into the driver’s profits.
Fixed fares a big advantage: One of the most unique and compelling features about Grabcar is that, after setting your pickup and drop-off routes, it shows you a set price for the ride. So, say, even if your driver took a longer route or there was traffic, your fare will not change.
Figuring fare parity can be tough: Grabcar’s set fares are generally higher than normal time taxi fares, though they are similar when surcharges are added to a taxi fare (such as evening or in-city fees). Depending on the city, the impact of this may or may not be relevant to the riders. For example, in Hong Kong there are rarely extra taxi fees while in Singapore they are quite common.
Cash payments make it an attractive option: Grabcar is a cash service. This is often an advantage for drivers who specifically want to work for a service that pays cash and for the consumer who doesn’t have a credit card-as, which is fairly common in Asia.
Less than optimal algorithm creates inefficiency: Grabcar’s algorithm is significantly worse than Uber’s. For the most part, Uber finds a car heading in your direction, while Grabcar’s app can book one that is still quite far away.
Inferior technology a distinct disadvantage: Grab’s technology seems to contain more bugs than Uber’s software with problems such as inaccurate timing of car arrival, longest routes taken and even problems with the bookings such as the app showing a driver can not be found, only to be called a few minutes later by a driver who was booked and is waiting for you.
Inaccurate maps create delays: Like Uber, Grab’s maps are not always reliable and it can be frustrating to spend minutes looking for your driver who is, according to the map, right in front of you, or take double the time to get to your location.
Extra tolls and taxes still payable: Like other services, you will still have to pay tolls to the driver on top of the fare.
Read more about Uber and GrabCar here:
What it’s like to drive for Grab or Uber